Does someone depend on you for financial support? Do you want to leave a legacy to those you love? Do you want a secure financial future for your family in a world full of uncertainty? Then you need life insurance. But how much life insurance do you need?
When it comes to this important decision, how do you know how much life insurance you actually need? Asurea understands that there isn’t a one-size-fits-all answer to this question. Fortunately, figuring out how much life insurance you need is easier than you think. Asurea is the Simple Solution for guiding you through the important questions about your family’s needs and financial situation in order to find you the perfect policy. Here are six of the most important considerations when deciding how much life insurance you need:
Why the 7-10 rule just isn’t cutting it
It used to be that having seven to 10 times your annual salary was a good way to measure how much life insurance you should purchase, but because the standard 7-10 rule is based on a general rule-of-thumb rather than on your individual needs, using this formula is really just taking an educated guess. In fact, most experts now agree that having even 10 times your yearly salary is not enough for most families today. Underestimating their future financial needs is the main reason why so many of families are underinsured. The reality is, most U.S. households only own enough life insurance coverage to replace 3.6 years of income – a clear indicator that many of us don’t understand the basics of calculating how much life insurance we may need. But don’t worry! When you sit down with an Asurea Agent, you can be confident that your individual circumstances are taken into consideration, and we will make sure you are not underinsured!
How much income will your family need when you’re gone?
Since the 7-10 rule is not cutting it, how do you know how much income your family will actually need? If you weren’t here tomorrow, would your family have enough money to meet everyday living expenses? If not, then at the very least, you should consider buying enough life insurance to replace your lost income. For example, if you’re making $50,000 a year and looking at a 20-year term life policy, you may need up to $1 million in coverage. And don’t overlook the fact that the cost of childcare and hiring outside help to manage household responsibilities can take a big chunk out of the family budget. For this reason, a stay-at-home parent needs a life insurance policy just as much as the parent bringing home the paycheck.
Asurea knows that everyone’s circumstances are different, and that’s why we begin every life insurance process by asking you questions to determine what your unique financial needs are. Because, quite frankly, we can’t get you the right coverage unless we understand more about what you want your life insurance to do for you.
How much debt do you have?
If you have debt, then in addition to replacing your salary, you’ll want to factor in what you would need today to repay your creditors if you were to die tomorrow. For example, do you have a brand new 30-year mortgage or is your home nearly paid for? Do you have car payments, credit-card debt, or other personal loans? If you have debt, then you’ll want more life insurance coverage to pay it off.
What are your long-term goals?
Almost everyone has long-term financial goals. Do you have children who will be going to college? Will losing your income change these plans? Does your family need to replace an older vehicle or even add a vehicle for a driving teen? What about retirement? Be sure to factor in the extra money your family may need for these and other future expenses. If you haven’t set aside enough savings for these types of expenses, then you’ll definitely want more life insurance.
How long will your children (or other people you care about) be dependent on you?
Are you raising young children or are your teenagers ready to fly the nest? The younger your children are, the more life insurance you should get. While some of your loved ones will eventually become independent, you should also consider those who may not. This is especially important if you have someone who is dependent on you because of special needs. A special-needs child or an aging parent could require your support for their lifetime.
Leaving a legacy
Are you a grandparent wanting to give your grandchildren a leg up for college? Would you like to help them buy their first home or start a new business? A life insurance policy can be an ideal way to leave them a legacy. Or you may want to give a large donation to your favorite charity. There are many ways you can use your life insurance to leave a legacy.
The Asurea Difference
As you can see from the above, when calculating how much life insurance you actually need, there are many factors to consider and no family is exactly the same. This is where Asurea comes in. Asurea won’t leave your family’s financial future to chance. Together, we’ll help you figure out exactly how much life insurance you should have based on your individual needs and current financial situation. Contact Asurea today to schedule a time for us to become your Simple Solution to this very complicated question.
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